BREAKING: Coinbase ends day at $85.8 billion valuation | Coinbase direct listing in review

Coinbase decided to do a direct listing, which is slightly different from an initial public offering. In a direct listing, only the shares that already exist in the company can be sold to buyers. In an initial public offering, underwriters can create new shares of the company, which then can be distributed to investors. So a bit of a difference there, and that's just to give investors direct access to the stock and so the stock doesn't get diluted.

So.

Joining me today to break down this event in the crypto space is our very own cointelegraph market analyst, Marcel. Thanks for joining me, Marcel.

Hi, Jackson. Thanks for inviting me. I think a lot of people are amazed by Coinbase achieving 100 billion or $90 billion valuation, which is compared to comparable to Goldman Sachs and some other big banks in the industry. But is it fair doing a direct comparison between some unregulated market? I'm not saying that Coinbase is unregulated. I'm saying that the cryptocurrencies assets industry is unregulated. So you can charge whatever fees you want. You can create the products as you wish, as opposed to Goldman Sachs, who has capital restrictions. And every new products or service that needs to be launched needs to be scrutinized by the SEC and stuff, so they move slower. It's definitely unfair competition, I would say.

Yeah, you brought up some good points there.

The.

The valuation of Coinbase was higher than rivals such as Facebook or Airbnb on their initial debuts in the markets, which is pretty outstanding given that Coinbase is a cryptocurrency exchange. So, Marcel, I just kind of want to get your general thoughts on this day, because Mike Novogratz called this a Netscape moment for crypto, comparing the Coinbase offering to. To one of the first Internet companies. Do you think that this is such a huge milestone for crypto that Mike makes it out to be?

No, Jackson, definitely not. I'm thinking like Bitcoin has just surpassed the $1 trillion market capitalization. The whole cryptocurrency industry has just surpassed $2 trillion. And we've done that in less than 12 years. Coinbase being worth 100 billion earning fees from fiat conversions to crypto and crypto to crypto should not be a sign of success. Cryptocurrency success, quite the opposite. If cryptocurrency had been achieved, I don't know, a 40 to 50% penetration, which we are at 4% perhaps, or 5%, there would be no need for Coinbase. Nobody would be changing fiat money to crypto and vice versa.

Right.

So I don't think it's a reason to celebrate. Quite the opposite. I think it's a sign that we are on a very early first stage of cryptocurrency adoption.

Yeah. And we were talking before, and you brought up an interesting point that actually the amount of, of volume from institutional investors on Coinbase has almost doubled in the past few months. So what does that tell us about the goals of Coinbase as an exchange? And who are they really marketing themselves to?

Yeah, if we go back in time, like six months ago, and if MicroStrategy called, I don't know, Bitstamp or Kraken or whatever exchange and said, listen, I need to buy $1.5 billion in Bitcoin over the next three or four days stops, first, the guy from the exchange would have laughed and said, well, we're joking. And then when he realized that the guy was not joking, he would say.

Well, we cannot do this.

If we try to execute an order larger than $30 million, market's going to fly 10, 20, 30% up. We're not going to be able to execute it. I've seen orders on Bitstamp, like one and a half two years ago of much lower, like 20, $30 million that caused the market to crash 10 to 15%. So that was unimaginable up to six months ago. So what Coinbase did was create a whole trading desk and a whole pool of clients aiming for liquidity, OTC desks and even on their own electronic exchange desk, preparing them to execute large orders. That was not done in one week or in one year. It took a long time to build those liquidity pools and to get the market makers and to get the OTC sellers. And once they were available, when the first large order, which I think at least publicly was MicroStrategy buying $1.5 billion, they were able to execute it. And that was a game changer for the industry. So if you see Coinbase numbers, their institutional volume, like six months ago was per quarter, $17 billion. 1, 7.

$17 billion.

On the last quarter of 2020, it was 57, so almost three times up. So their institutional volume today is like 60 to 65% of their total volume. So should we really be comparing Coinbase to the other exchanges like Kraken, bitstamp, Binance and whatever? I don't think so. Maybe they're competing with Grayscale, maybe they're competing with the etf. They're focusing on institutional clients, on custody services, which is. I don't know. It sounds like an etf, it sounds like a grayscale fund. So it's a different animal.

Yeah. So would you say that the significance of this event doesn't really embody the kind of core values that crypto proposes with like Defi and the decentralized nature of the technology?

Yeah, Jackson, I would say so. As I said earlier, if Bitcoin and cryptocurrency and Ethereum industry ecosystem had been at 30 to 40% adoption, we would not see Coinbase at this value because people wouldn't be demanding fiat exchanges to. Nobody would be selling Bitcoin or Ethereum into dollars back, maybe to stable coins. But if you are going to do that, you can use a decentralized exchange so you can hold your own coins on your old wallet, so you don't need to give it access to a centralized exchange and the fees are way lower. So the future, if the future belongs to cryptocurrency, the future does not belong to a centralized exchange, fiat gateway or they even have a Visa card or something like this. What does that, what relation does that hold with cryptocurrency and decentralization? So I see them as antagonists. So Coinbase success should not be interpreted as Bitcoin or Ethereum success.

Which is interesting because we saw the markets across the board pumping quite heavily for the past, I don't know, week or so. Bitcoin made a new all time high, Ethereum made a new all time high. XRP was nearly at $2. Oh, Doge is up like 80% in the past 24 hours or something absurd like that. So the crypto sphere is obviously reacting quite strongly to this hype news of Coinbase. But it's interesting that you bring up that you think that decentralized entities like Coinbase will eventually become more or less obsolete if the vision of Defi is kind of realized. Right. So I think a lot of people were wondering whether or not to try and buy some Coinbase stock today. This is a big moment. And given that kind of future outlook, did you consider purchasing Coinbase stock for yourself?

Personally, I abandoned traditional finance over four years ago. I worked at ubs, Deutsch Safra for over almost two decades. But when I entered Bitcoin and when I entered cryptocurrency industry, at first I said, well, it doesn't make sense to invest in traditional finance anymore because I don't see it perpetuating, I don't see it growing in the same pace as the cryptocurrency is going to grow. But I'm not saying that the ETF is not going to exist, or grayscale funds or Coinbase are not going to exist in 10 years. There will always be a market for individuals, pension funds and people who don't want to handle wallets and their own security and stuff like that. They will leave at their mutual fund manager, whatever. So there will always be room for a Coinbase doing custody service and Fiat Gateway. I don't think that there's going to cease to exist in the next 10 years. That'll be one utopian dream, at least for the next 10 years. But what I think that if we look at the decentralized exchange volume Today, they're doing $4 billion per day. This industry was born seven, eight months ago, and they're doing the same volume as Coinbase, who was born in 2013. So it's saying that Coinbase will outpace the decentralized industries. It's crazy. No, it already lost this battle. What Coinbase should be focused and will focus and will make a lot of money is being the main hub for institutional players who want to get in or out from cryptocurrency to Fiat over the next years. There'll be a lot of demand for that. Undoubtedly. Will there be competition from Goldman Sachs and Deutsche bank and ubs? Probably, yeah.

Interesting. Yeah. I'm looking at the chat and someone is here saying, I still understand why anyone would buy Coinbase stock when they could buy Bitcoin. It's kind of a funny take on it.

Yeah.

One is.

When you're owner of an exchange. I remember Arthur Hayes from Bitmex, he said this all the time. If you own the track race for horses, you don't bet on horses, you don't buy a horse because you already, your life depends on this ecosystem working. So if you're betting on horses yourself, you're doubling the exposure on something that's already risky. So he said, well, I'm good here, things are good for me, let's keep that way. So I think that Coinbase should be doing pretty well over the next years. No doubt. But does it have the same upside as Bitcoin and cryptocurrency? No way.

Yeah. And I mean, Coinbase's revenue, I think is what is attracting a lot of institutional investors, particularly, I think they generated $1.8 billion of revenue last year. And going back. Yeah.

But if you go back to 2017, four years ago, Binance did in one quarter a billion dollar revenue. So it's $1.8 billion. The market was trading at I Don't know, half a trillion 500 Biden, the whole currency and the market has quadrupled and Coinbase is only doing double what Binance did.

So I don't think that Coinbase is.

Really the leader of the pack here. There may be the leader of institutional flow, there may be the most regulated venue, but cryptocurrency is not about that.

Yeah, and they may not be the biggest, but they were the first.

And they did.

And they did, I think, try to make a moment out of it. They asked, I think F2POOL to write a message in Bitcoin block 679,187 referring to a US Congress bill that was passed in March which set aside $1,000,000,000, for measures aimed at curbing the economic impact of the pandemic. So that's an original nod to the Genesis block, where Satoshi's original message regarding the financial crisis of 2008 was there. So Coinbase trying to make themselves a big moment there. What do you make of that?

Well, why does coinbase were in 2021.

Like eight years after they launched, they still don't have lightning deposits, lighting network deposits. Which is the layer 2 solution for Bitcoin which most competitors bitfinex has it, okx has it, bitmex I think is implementing it. And I've never seen Coinbase effectively supporting the industry other than that, other than a few altcoins which they intend to list in a short time. So it makes sense to invest in them. But really taking the time to empower Ethereum ecosystem or Bitcoin developers, I never seen Coinbase doing any of that. So if they're pro Bitcoin, pro Ethereum, they should be showing that, not saying that I support that. That's a big difference.

Yeah. And we should have another guest joining us soon, by the way. Frank Holmes, who is the CEO of U.S. global Investors. We're just waiting on him to come into the room. It should be a few minutes from now. But in the meanwhile, this news about Coinbase drove a lot of movement, as I was saying earlier in the crypto market. Do you, do you attribute all of those all time highs that we saw this week specifically to this event? Or would you just say this is part of the general trend that's going on right now in crypto?

I think that both whales and smaller.

Players, they need incentives or narratives to either buy or sell. And when you see a major exchange getting listed at the same valuations at large banks, people get more confident, they get more cocky, even if their Crypto was already up 500%. He said, well, I don't care if coinbase is worth 100 billion, then my Ethereum ecosystem should be worth 200 billion or 400 billion. So people somehow do this link which shouldn't exist. One thing is equities. One thing is being owner of part of the Coinbase and the other one is holding BNB token or FTX token or Ethereum token. You're not getting profits from a company. If the Ethereum ecosystem doubles next year, doesn't mean that the Ethereum token will double the price. There's no direct relationship here. Meanwhile, if Coinbase revenues go from 1.8 to 3.6 billion, you can be pretty sure that your stock is going to up like 50% to 100% or even more because of the growth, because they're focused on dividends and meanwhile the tokens, and even Bitcoin itself doesn't have dividends. It's not what they are designed for. So I don't think there should be deregulation. But people need dividends, some kind of narrative to buy. And that was a good one.

And do you think that people, or when I say people, I mean maybe more traditional mainstream investors, do they see Coinbase as an investment to make to get quote, unquote safe exposure to the volatility of crypto? Do you think that was part of Coinbase's game plan when they made this move to do the direct listing?

Yeah, because when coinbase decided to IPO first, Grayscale funds already had like $50 billion of clients money. Second, the Canadian ETF was already launched with a billion dollars and the American ETF should be launched over the next, I don't know, 18 months.

So Coinbase knew that.

Well, the best thing I can do right now is display myself as a more safe way to invest in crypto digital assets industry because we don't hold even our money. Only a small part of that has been invested on Bitcoin and Ethereum. We are not here to do crazy stuff. We're here to compete with the banking system. I think that's their discourse and that's what the investors, when they buy Coinbase shares, they're expecting and thinking, yeah, for sure.

So once again you see that Coinbase is making a move to compete with banks then, right? Is that what you were saying?

Yeah, they're trying to show that, well, if the cryptocurrency, it's going to become a $10 trillion industry, there always be demand for either crypto, crypto trades or.

Crypto financial product products like borrowing and.

Lending and stuff like this.

And then we're going to be a crypto bank.

That's what they're aiming. Clearly they want to be known as a crypto bank, not as a cryptocurrency exchange. Definitely not. There's a big difference there.

Yeah. And so who will react to this? What institutions do you see reacting to this move by Coinbase? Will this spur some reaction from the traditional finance to try to make a move into crypto in order to compete with Coinbase? Or is this going to target a response more from the crypto space? Will we see other exchanges change, try to replicate this move by Coinbase?

As I said earlier, Jackson, of course Goldman, UBS and Deutsche would love to have a similar service, but until it's fully regulated, they want to put their toes in because Janet Yellen was like this week, bad mouthing cryptos and saying that regulation is going to be tough and stuff. So why are the banks going to go to the hell of the trouble to launch their own cryptocurrency service and exchange? Besides from brokerage, brokerage like, okay, I sell ETF shares. Okay, I can sell you a CFD of Bitcoin. But that's not really creating a crypto bank or stuff like that. So until we have a clear regulations, I don't think the banks will be competing. But of course Kraken is going to try to IPO or directly your shares for sure. Makes sense. Awesome.

Well, we have a new guest joining us now, which is Frank Holmes, who is the CEO of U.S. global Investors. Thank you, Frank, for joining us.

It's great to be here. Also executive Chairman of Hive Blockchain.

Awesome. Yeah. So first off, let's get your thoughts on what happened today. What did you make of the direct listing by Coinbase?

Well, it's a mega issue. It's bigger than Fidelity when you take a look at the market cap on valuations. But I have seen this, I'm a little older and I've been in the gold business and gold mining and financing for many, many decades. And we have gold ETFs, et cetera. So what happens so often is that these stocks will move not in tandem with the commodity and you'll get distortions because some other companies come involved like Coinbase, sheer size. And I think this surprised a lot of people that not only did it sell off, but all the crypto mining stocks took it on the chin. Also, Vaneck also comes out with another ETF that's going to be involved with infrastructure. So does money leave that to go into that particular etf? And I think that's creates the turmoil. But I think look at the volatility I know from the miners, I know for high blockchain, every $100 in Ethereum adds $2.5 million in our profits. So we see it going up, we see our production very stable. So it's actually a good time to buy on these big sell offs. And the DNA of volatility for Ethereum and for Bitcoin is like Tesla. They're much bigger than gold, much bigger than the stock market. So you have to recognize it's a disruptive industry, it's a new industry and that volatility is just going to be huge. And you try to use these buying opportunities when you get disconnects and the big sell off like Coinbase coming out and then cryptos are up, but every other crypto related stock sells off. It's usually a good buying opportunity.

What sell off in particular are you referring to?

Well, we saw that Coinbase gaps up and goes down, but all the crypto mining companies they sold off from 8% to 15% today. Riot Marathon here in the US hive was up and then it rolled over. Even though bitcoin Ethereum are making new highs and we're doing exceptionally well that way. So it's a disconnect and we just sold off a sentiment I see as another investment company that's involved with this space. It sold off with the market Today, it fell 9%, but they're making a lot of money. So that's the opportunity.

Marcel, do you have any thoughts on the minor sell off that Frank is referring to?

I agree with Frank. Whenever, for example, bitcoin price crashes like 10% in a day, which is normal, it happens, it's a volatile asset. A lot of the crypto related stocks like mining or Coinbase will be dropping like 5%, which doesn't make any sense because first, bitcoin price in a single day doesn't represent much of coinbase or mining company revenues over the year. And second, because we all know that in a matter of days or weeks, Bitcoin will likely go back to the same price it was before. So it's all about volatility. So if you have more listed options to profit from this volatility, it's good for investors, it's good for the industry. I have no doubt about it. About it. I agree with Frank.

So Frank, coming from the more traditional financial space, how do you think investors who are initially maybe a Bit scared. Scared of getting involved in crypto, scared off by the volatility. How would they approach this Coinbase offering? Because I think MicroStrategy, another company that has a very large exposure to Bitcoin cryptocurrencies. When Bitcoin's price hit a new all time high, their stock rose BY what, like 10% or something over the course of a day. So that also creates a lot of volatility within the stock itself. How are people in the traditional financial space viewing this opportunity?

Well, there's so many cross currents in something that's disruptive and defi financing. This whole concept of decentralized financing mechanisms, and that's the gate. The real leader here is Bitcoin and everything follows with it. So what you do see is coming back to Metcalfe's Law as more publicity comes out with Coinbase, all the original people made a lot of money with it. It's a huge win. I know this from, from seeding my mining companies. When they've gone up 300 to 400 to 600% in the portfolio before they've gone public, they all fall 30%. I don't know why, but when I'm pricing a private that keeps saying it's worth more and more and more, I discounted the portfolio to 30% because when it becomes free trading, it falls 30% and then I take off the discount. It's just part of this spectacular win. Going to hear more about how much, how many people made a lot of money with it. All the employees got $25,000 bonuses. This is huge we saw earlier this year with Ethereum. On February 8th, all of a sudden the CME launches it. Everything was Bitcoin for the whole year, but Ethereum almost doubled what Bitcoin produced in performance numbers. So now we're seeing more people interested in Ethereum because it's listed on the cme. Now we have Coinbase. I just think the ecosystem is growing, it's bringing in more people. People are respecting the DNA of volatility just like they did with Tesla. I remain very bullish.

Do you think that giving a centralized exchange like Coinbase undermines a bit the core values of. Sorry, giving a centralized exchange like Coinbase, this much attention and this much hype around this direct offering, do you think it undermines a little bit the core values that crypto stands for in terms of decentralization and giving power to the people, democratizing money?

No, I think it just brings in more people. If you go and look at When Bitcoin had 20,000 in 2017, how many wallets were there out? And now we have more than double that number. And the price of, of Bitcoin is exploded from that previous high. So I think that more and more people are just coming into this ecosystem and learning about it. Coinbase, it just is a great aggregator and it has first mover advantage of being there first. And look at some of its investors. USAA is just up the street. The biggest military insurance company in the world. They're one of the seed investors. The New York Stock Exchange has a venture capital. They couldn't set up a similar exchange because of all the federal regulatory rules. So they invested in Coinbase. They made a ton of money with it. So I think there's many more wins than it's sold off today. But I think that this phase of decentralized mechanisms of capital formation is here to grow and go.

And there's been, some people have been commenting on this event, saying that this is a very historical moment, this is a milestone, yada yada yada. I think Mike Novogratz compared this to, what was it? Netscape initial offering, like an early Internet company. The founder of Initialized Capital compared Coinbase's offering to, he said, this decade's Microsoft, Google or Facebook. Do you think that Coinbase lives up to that hype?

Oh yes, absolutely. It has the first mover advantage. I know this in the ETF space, if you have the only product there and it starts getting traction, it's massive or you're the first to a hot category. So if you're the first Bitcoin ETF that gets approved, you will garner most of those assets. Same thing as, look at the GLD for gold. It garner most of the assets. Then other ETFs came along, cheaper fees, didn't matter. They still predominately are attracted to gld. So Coinbase is the first company to go public. It has this very powerful first mover advantage. It could become like the Goldman Sachs of the crypto industry.

That's an interesting point you just made there about comparing Coinbase to Goldman Sachs, because I think Marcelo was talking a bit about that earlier. Marcel, maybe you want to expand upon that comparison a little bit with Frank.

Yeah, Frank, let's say if we go back in time, I don't know, 40 to 50 years, and we looked at, I don't know, bank of America or a major bank, there was much more regulatory pressure, it was much less capital controls, I would say from government and from risk agencies and from Basel stuff. So it was much Easier to make money 40 to 50 years ago. Even the CME and Exchange. So what we're looking at cryptocurrency right now. The industry sounds like avant garde, the most technological stuff ever heard of. But if you look at the details like the BTC volume goes up on a all time high, Coinbase trading goes down, system goes down. So we're looking at, we're trying to do decentralized and microtransaction stuff using Amazon web Services or the same servers that CME is using. It's not made for that, it's not ready for that. I think there's a bit of a clash here. So comparing Coinbase to Goldman Sachs today is not fair. You should be comparing Coinbase to Bank of America 40 or 50 years ago. That's what I think.

Okay, that's good. It's a very valid point. But I want to come back to what I shared earlier. Based on all my years and decades of managing mutual funds and ETFs. Whenever a private is in our portfolio and it goes up 300% in a year, when it goes public, they fall 30%. That's just what happens. The psychology of human beings, it's not going away. It doesn't matter if it's crypto or, or it's Tesla. It's just what it is. So it's gone down. I mean it's corrected from its highs. I just think it's normal for me in my experience. But I think that we're going to continue to see more people curious and say how did I miss that? What am I going to do? What's next? You look at Ark ETFs. Ark ETFs three years ago were 3 billion. Then they go to 15 billion. This year they went to 60 billion. They've sold off 30% but they still have in the top 5 of all fund flows for disruptive of all fund flows for ETFs right now. And they're all highly volatile. Disruptive money hasn't totally liquidated even though it's fell 30% in the quarter. Some of these products, they want to be in this space. And I think that that's where we are in the early innings. Now go back to 1995. It was Netscape, you're right. And it was also. Remember Ask J. Well, he's history. Yahoo Finance is the only thing that keeps Yahoo alive. And no one expected Google. There's been so many crypto exchanges that have been horrible, gone bankrupt. The two ones in Canada, it's just disastrous for Investors, they went bankrupt. Now all of a sudden you have something going public, registered with the SEC creates another level of feeling safe that will attract more people to want to participate. And that's just my overall experience. But what I want to share with you I found is most interesting is my age in this space find it's very difficult to take intangibles and try to say they're tangible. Warren Buffett is still Bitcoin can't be real. That narrative. Well, he was so wrong last year when he said, everyone get out of the airlines. Because I know for my jets ETF, we had 25,000 Robin Hooders come in and they're up 120% from when he said get out. And he was getting out, they had difficulty. But the best example is diamonds. If we go back 120 years ago with the Oppenheimers, when they got control of the De Beers, they basically formed a cartel. They stopped supply and then they turn around and hire influencers, movie stars, royalty, families. That diamonds represent something intangible. Love, love, very intangible. But this validated it. And all of a sudden, diamond prices start rising and rising and rising. And then in the 60s, diamonds were not part of the engagement process in Japan. Guess what it is today? And intangible became very tangible with billions of dollars traded every day in diamonds and jewelry. So I think that bitcoin, Ethereum, that whole turn of we're in that early innings of something changing where the intangible becomes tangible. And bitcoin now with 35 million wallets out there, is really getting traction to be tangible.

Anything. Yeah, go on, Marcel.

I agree, Frank, 100%. I think the diamond example was perfect. But the question I make is if I had to bet my money on a company that has the cryptocurrency values and I think it's going to grow 10 times, 20 times, 50 times. It's not Coinbase. I'll bet on Fidelity. Crypto Fidelity. They're the largest asset manager in the world and they've understood and they started mining cryptocurrency like six, seven years ago. So they're doing their homework. They're going to be the biggest player in the markets. They no doubt.

I agree. Abigail is just brilliant. And they have their own Google Labs of 100 scientists working. And so no, I'm so impressed with her thought leadership and her vision. There's no doubt it's a big push for bitcoin and bitcoin ETFs to get put into the normal capital markets.

So do you think that you've mentioned ETFs quite a few times? Do you think that this direct listing is going to pave the way for an etf? Is it inevitable at this point? Are we going to see it this year? What are your thoughts on that, Frank?

I think we're going to see it this year. We've got to remember just today the new head of the SEC has been approved to come in to run the sec. And he was only a year ago teaching at mit. He's, he believes in Defi, he believes in Bitcoin, Ethereum and what they represent. So I think we all have to remember that when JP Morgan was trash talking this industry, the only reason why they were doing that is because they were running so fast to get caught up. And when they came up with their stablecoin, that was the bottom of the crypto winter In February of 2019, all of a sudden they stopped their trash talking and now they're putting it allowing for their high net worth customers. So we're seeing one thing after another that's increasing the overall importance of the blockchain technology.

Yeah, I totally agree. And one of the things that I think you've mentioned a number of times here that I like to come back to is this idea of the network effect. You mentioned Metcalfe's Law before and how all of this media hype, especially around listings like Coinbase, are really important for getting people just access to cryptocurrency. And I think as we've seen, that leads to a direct effect on the price.

And you know that this is really important. Look at science and physicists. It was like in 75 that the Taoism of physics came out the book and the idea that everything had a function on Newtonian and Descartes laws, it's evolved to the network and the importance of our relationships and the significance. Now we have Chris Dakis, the Harvard professor that talks about the network of emotions and feelings. There are three degrees of separation, not that we know someone of six degrees of separation. The whole concept now of being dynamic and evolving and moving with network is going to, I believe, accelerate.

Yeah.

Marcel, any thoughts on that?

Well, I think network effect, I see cryptocurrencies as a social network. It's a social network for money. So the more companies put it on the balance sheet, the more exchange get listed, the more ETFs get approved, the more people start using their own wallets. It doesn't matter if you hold Bitcoin or Ethereum directly or indirectly, you Empower this social network. It gets bigger, it gets stronger, it creates second layers, it improves, you get a better solution. So I think we are on a verge of a moment that it's going to be inedible for ETF listing. It's going to be inevitable for a regular Joe that doesn't hold any cryptocurrency, because if he has S and P shares, he has a bunch of companies that hold Bitcoin or Ethereum on their balance sheet. So directly or indirectly, you're going to be exposed to the cryptocurrency market. That's inevitable. I don't think there's a way back.

Great.

Final thoughts, Frank, on the events of today.

It's remarkable. It's a huge, huge event with Something valued at $100 billion goes out in the marketplace and rallies and sells off. Like I said, I expected it and Vanek came up with their product. So there's lots of things happening, lots of successes. And remind everyone that some of the biggest, most conservative institutions like USAA have or see investors in Coinbase and the New York Stock Exchange couldn't create their own exchange, so they just turn around and invest in it. They saw the vision. Now the vision's coming out. So exciting.

Awesome. Thank you so much for joining us today, Frank.

Thank you.

It was a pleasure. All right, one moment. All right. Yep. And now don't go anywhere, guys, because we have another guest coming on. It's Mike McGlone who is a market analyst at Bloomberg and he's going to be chatting a bit more about what his views on the events of today. Marcel, will you be sticking around for that or do you need to head out?

Yeah, I can stick for 15 minutes. Yeah, sure.

Lovely. Lovely. Let's get Mike in here. I believe he'll be calling in on his phone, so we may just be getting the audio from him. But Mike, can you hear us?

I hear you. Do you hear me?

Yes, we do. Thanks. It's great to have you on the line here. I've got by my side here Marcel, who is a market analyst at Cointelegraph. And yeah, let's just chat about what happened today. So right off the bat, what are your thoughts on the Coinbase listing?

Well, the bottom line for me is ignore the noise. And today's a lot of noise. Look at the big picture, look forward a month, a week, a year, and this is a major milestone, the legitimization of cryptos and bitcoin. Coinbase is a profit making machine. What's the next steps? It's probably going to be in the major indices, probably going to be the Nasdaq and S&P 500. The key question we have to ask ourselves, what's going to trip that up? I don't know. To me it's just going to be more the same. So that's my bullishness on bitcoin and what's really happening in bitcoin is it's becoming much more of an adult bull market. I mean, 30 day volatility has dropped to the lowest since when it broke out above 10,000 in October, November. And that's typically an indication of higher prices. So the way I look at is there's that rise in bid below the market, a lot of its institutions and I don't see it going much below 50 on a major shift, probably not much below 60,000. And next key resistance I think is 70,000. Sorry about that. I'm walking down to the train, you might hear an ambulance in the background.

All good, all good. It's great to hear those numbers and targets. Maybe we can, you know, we've been talking just a bit about the Coinbase event specifically today, but it would be great to kind of dig into bitcoin a little bit in those levels. Marcel, maybe you have some targets that you're looking at with bitcoin as well and you can compare them a bit to what Mike's thinking, because I know that a lot of people considered now that we've flipped 60k for support in bitcoin. So I'd be curious to see if this is the next stepping stone. This Coinbase news is the next stepping stone for us to make a push, as Mike was saying, to possibly 70k or higher.

I like to focus on gold for now because it's the main comparable for bitcoin and cryptocurrency industry. And at 60K, we are roughly at 10% of gold's market cap. Gold's $11 trillion for Bitcoin. And if we compare the numbers of ETFs and institutional government held gold and what the wallets holding over 100 BTCs are, they're roughly the same as well, the wallets holding over 100 BTCs holds like 45% of the, of the market cap. And if we look at governments and institutions and ETFs, they're holding like 45% of the gold itself as well. So I think 60K, it's going to be definitely a support level here. But I think going to $10 trillion, it could take like six months, it could take three years, not much more than this, because as the curve of adoption is not linear, it's not linear. I see. So when MicroStrategy puts Bitcoin on the balance sheet, then Square puts on the balance sheet, so more companies will follow through because they've seen Tesla's success, they've seen MicroStrategy success, so they're thinking, well, why don't I do it? Because inflation is coming up and if I hold dollars on my balance sheet, I'm going to lose money. It's going to pretty fast. But I want to hear from Mike McGowan what he thinks could happen to the Bitcoin price if ETF gets approved over the next three months.

I think the key thing, Marcel, I appreciate your analysis, is that it's not an if, it's a when. Particularly with what's happened in Canada and the new change at the sec. Because it would be considered very much irresponsible now not to approve ETFs. And the key place in that space is, as I published on today's gbtc, the Grace Bale Bitcoin Trust is clearly on path to surpass the gld, largest commodity ETF on the planet in terms of market cap and assets under management by June or July if we just sustain the same trajectory and once we approve ETFs in the US. So I think it's more of a when of course that's a major risk. If we don't and I think it's a very small risk, this is probably going to be the go to like glt, gld. It's be the liquidity etf. And that discount which was the key factor today is GBTC went down and discount widen that, this will just continue to march higher. And key question we have to ask is what's going to stop that? So ETFs a matter of time. It's a classic very good dangling carrot for bullishness. And I don't see us getting past a plateau in terms of price until we get well past saturation of ETFs. And that's the key thing to happen today. The persons on the world who just like to invest for pushing a button on a brokerage account, they might have sold some GBTC and bought some coinbase. But big Picture is via GBTC now you can basically get Bitcoin at basically about 90 cents in the dollar. And when we get ETFs, it's going to be a top one. And it's probably going to be just a matter of time that what's 50 now goes to 100. That is with near 100,000 in the price of bitcoin. Again, my key question is what trips this up? Coinbase is just part of the milestones on the back of Tesla allocating to Bitcoin this year. And the whole world of investors now know if you don't allocate to bitcoin, you're at greater risk of appearing like a fool rather than just putting a small portion of your assets. And to me, it's just a matter of time that they all do it.

I like the way that you're thinking about it in terms of, you know, what's not what's going to push us there, but what's going to stop us from getting there. And you know, it does seem like we're at that point and I think, I don't know, maybe. Marcel, do you want to respond to anything that Mike said there?

Well, I don't see GBTC as being the leader of the pack because when ETFs gets approved, there will be a bunch of them. Some will be using CME futures, some will be using as reference price, some you'll be using their own index. There will be some differences and I don't think that because GBTC was the first to launch the tradable funds, they'll be the leader of the PAX in ETF. But I'm pretty sure that if you have like $45 billion in in funds and ETFs of Bitcoin and crypto right now, in a year time we're going to have at least double than that 100 billion, 150 billion and we're going to surpass gold. So I agree with McGlon, but what I think the market is missing is that when the American ETF gets approved, the bitcoin price is not going to rise by 10 or 15 or 20%. It's going to be much, much higher than that. Because people who has money on their 401ks and pension funds will be able to buy it easily and with no stress. If you go back in time like six months ago for a fund, a mutual fund American to trade bitcoin at cme, they still have to ask SEC approval, which is crazy. But when the ETF gets listed, they don't have to do anything. They just need to log on their brokerage and click on buy. It's much easier, less risky and doesn't need to change funds regulation and whatever. They have their hands tied right now. They can't invest in BTC Most of the funds.

Yeah. So I'm curious to hear your thoughts on this Mike, because a lot of people, as I mentioned throughout the show already, including Mike Novogratz, have compared Coinbase listing to a Netscape moment for crypto or an early Internet company and that. But do you, I mean first off, do you see it that way or do you see the Coinbase listing more as the stepping stone to the real gold mine, which is the etf, which is what we've been talking about.

It's another one of the milestones and stepping stones from 2021 and they just kept adding up. But I view this as part of the near perfect storm for higher prices. Remember the foundation last year was the year that bitcoin volatility, annual volatility, dropped to the lowest ever versus the stock market versus gold versus crude oil. And now we have it post halving and institutions are getting into space. So to me it's just a matter of time. But I'll just push back a little bit on gptc. Remember, most of the people allocated to Bitcoin, this is a new and different asset class. They almost go to, almost always go to the stalwart liquidity provider that's been around the longest. GBTC has already won that when they go etf, they'll have the largest amount of aum. And if you're allocating a big amount, you're not going to go to a new etf, you're going to go to one that's been around and GBTC has been around since 2015. So once it converts, it wins already depending on how the approval process works.

Any final comments you'd like to make about that, Marcel?

Well, whoever wins this fight, it doesn't matter. What we should be focusing here is that as McGlone said, the ETFs and funds of Bitcoin were surpassed $20 billion like six months ago and already at $50 billion. And they're going to be at 150 in six months time. So if you are a CFO of a company or a mutual fund manager and you see the growth that this industry is having and you say, well, I'm going to stick, wait around for more a couple of years until it gets fully regulated, it's crazy, it doesn't make sense because at least you're going to have to put like 1 or 2% allocation right now so you can understand how it works. You, you can learn. So that's what I've been saying about Fidelity Crypto. They've been doing their homework so when they invest, they're not going to allocate 1% on their mutual funds. When the ETF gets listed, they're going to allocate 20%, 10% or higher than that. So it's going to be a game changer. Coinbase listing is not ETF approval.

It is.

So since we're on this topic of kind of comparing game changing events in the crypto space, at the very beginning of this show, Marcel and I were kind of. Marcel said that the events of bitcoin hitting a trillion dollar market cap and the total cryptocurrency market cap being $2 trillion is potentially more of an event than the coinbase listing. Do you see these?

These.

Oh, hey Mike, do you see these market cap checkpoints, so to speak? And the exponential growth of the total cryptocurrency market cap that we saw this year going to 2 trillion from 1 trillion in just three months. Do you see those as bigger milestones for crypto than this coinbase listing? It looks like you're still muted.

Mike.

Put the camera on. I forgot to unmute. You can see I'm on the commuter train. There's not too many people around. Yeah, definitely agree. The next key milestone is getting past this ETF approval. So that's a key risk. If it's disapproved, which is almost as likely as me getting hit by a bus, then that's a problem. But it's just a matter of time. You got to get wealth through. There's going to be massive saturation and then the first person who buys it. You don't want to buy an ETF with a billion dollar aua. If you're putting in half a billion dollars, you got to buy the one that has 40 billion and that's GBTC. So whatever works. That doesn't matter. And it's a key point that Marcel and both I agree on. It's a massive dangling carrot of bullishness. So the only thing we need to really keep our minds on is what's going to mess this up. And I don't think the US is dumb enough to regulate it. And you can't really regulate the world's largest open source software on the largest network, but you can regulate dollar digital currencies, which is. I think it's going to come. I mean that's just what's the largest traded cryptocurrency on the planet is tether. It's more than bitcoin. To me, that's what's coming. But that's part of this Whole space, just the ecosystem is just starting to kick in. So that's why I view bitcoin as getting to 100 grand. Doesn't really mean a lot, but it's how it does it. I'd let it have it do it orderly rather than backing up and being very top, very volatile. What I see now is this orderly bull market, this consolidating breaking out slowly and just the rising bids below it. So key question we ask ourselves, what's going to trip it up? When I find something, I'll let you know. Until then, I don't think to me the only key, key thing would be the big, big macro downshift like we had last year.

Do you, do you agree with that, Marcel? And do you also see the kind of the progression of bitcoin this year? Do you see it as orderly as Mike described?

Yeah, for sure. We're seeing that each time S and P company puts a billion dollar on the balance sheet, we go up from 20 to 40, from 40 to 60, then the next step gonna be from 60 to 80. So it's happening at a good pace, interesting pace. It's showing that adoption is happening by itself. It's not being forced. Each company has its own time. Some will take six months until they from the time they decide to buy bitcoin to the time that they effectively do it, some will be two months. So I think it's going in an orderly way, which is good for the industry.

Yeah, for sure.

And now Mike, one of my favorite questions to ask.

Ask.

You mentioned 100k earlier, but do you have any particular expectations of what bitcoin's price could end up by the end of the year? Especially considering that you believe. Yeah, could be upon us within the next few months.

Even higher. I just had a seer smile. No, higher. Did you hear me say higher?

Higher. Okay, yeah.

Price is going to be higher. And that's one thing I have to be careful with, putting price and time together because I'm just a strategist. This is where I think it's going. That's one thing that I love doing in the space compared to what I've done in the past. I'm completely neutral, I'm unbiased. My primary goal is to get it right normally for Bloomberg terminal users and to trickle up to events like this, which I really enjoy. So higher. I think the way we should look at it, it's a hundred thousand. The key level stock to flow says that's a good level. That's good round numbers. One, it's a zero added to 10x the 10,000 lock in, which is really the lock in since 2000, 2017. And if you just take what it did, the key having years, post having years was if you take 2017, it was a quarter of the rally for 2013. Quarter, you know, up a quarter of that. 15x gets us to 100 grand. So it's kind of the stars align there. And again, I feel kind of strange saying such high levels, but the conviction strong and after today, conviction stronger.

Marcel, do you have any similar milestones that you're eyeing up?

Well, first let's go back to the stablecoin industry, which is mostly unregulated because it's led by Tether, which holds like $45 billion worth. And it's not only because of their size, but their relevance to OkX and Binance and most of the exchanges that depend on Fiat gateways because they don't have their own bank accounts. So if Tether goes down or have any trouble, I think that's going to be the point that we might break the 50k low. But once we've cleared this risk out of the screen, it opens a ramp to go to 200,000 or $300,000 per bitcoin quite easily because right now it's a risk. So I agree with my.

I hope, I hope you're right.

Yeah, great. Any. Any final words for the audience here, Mike?

The key thing I like to point out is bitcoin is going through these milestones and I look at 2021 as a perfect storm. What I suspect is going to happen looking back from the future is we're going to adjust to a higher Plateau, probably around 100, 100, probably higher than 100,000. But we'll probably never retrace the majority of this move from 2021 like we have in the past, because it's different this time. Institutions are getting in and there's that rising bid below and that rising narrative of human nature. I've never seen that. If you don't allocate that 1 to 2% of your 100 units to Bitcoin, you're going to look like a fool. Or your risk of looking like a fool, like Marcellus said, right. What's the risk of 1 to 2%? Everybody in the planet knows that narrative is just kind of have to. And that's very unique in world history and markets. History. Awesome.

Thank you so much, Mike, for joining us today.

Thanks for having me and sorry for delay. I appreciate you having me.

All good. It was a pleasure.

Cheers.

Cheers. All right, that just about wraps it up for the stream. Marcel, you hung in with us the whole time, so I really appreciate you, appreciate you being here. And before I let you go, I haven't said this all stream, so I'm going to say it now. Guys, if you enjoyed the show, please hit that subscribe button like the video. We really appreciate your support. Thanks for all the great activity in chat and, you know, it was a big day for bitcoin. It was a big day for crypto. Thanks for being here. Marcel, final parting words.

Yeah, thanks, Jackson. I enjoyed participating here. Mike McGlone, great guy. Frank Holmes knows a lot about the mining industry as well. So they're all bullish. And I think 2021is going to be a major year for cryptocurrencies. There's no doubt about it.

No doubt, no doubt, no doubt. You heard it here, guys. All right, thank you, everyone and have a great evening.